If you are a Russian company looking for capital you should understand
that

Russian government or Russian bank guarantees are not needed

Western government guarantees are needed and are available

The Funds that have capital to invest, received that capital from the
same governments that issue the investment guarantees

Although governments say that the investment funds are privately owned
and privately managed and make their own commercially based investment
decisions, in reality, since their investment capital came from the U.S.
government they are likely to pat attention to invitations to review potential
investments recommended or referred by the government, to see if they meet
their guidelines. Approval by one is therefore likely to lead to approval
by the other.

Technology and experience in operating a global business in the same
industry as the Russian partner

Existing markets world-wide for products the Russian company is capable
of manufacturing

A demand for Russian made components for assembly into American made
end products

Are eligible for foreign risk guarantees from U.S. Government or European
Government Agencies which reduce the risk of their investment in Russia

Palms & Company assists American investors and their Russian partners
through four activities designed to create a reduction in risks asssociated
with investment in Russia.

Financing of businesses through loans and loan guarantees

Working with private investment funds which provide equity for U.S.
companies with Russian partners.

Assisting in the preparation of documentation required to obtain insurance
against a broad range of ploitcal risks.

Engaging in the distribution of information in Rusia designed to inform
the Russian business community of opportunities for obtaining capital in
the United States and Europe and Asia.

A private corporation established in 1934, Palms & Company, Inc.
has worked in Russia since 1989 . The government agencies which provide
the guarantees, have since their inception, supported investments of more
than $100 billion dollars world-wide. All the guarantees provided by the
The U.S. agencies involved in this work are backed by the full faith and
credit of the United States of America. The United States has always lived
up to its obligations and never defaulted on an debt. It is considered
the best credit risk in the world.

Palms & Company provides assistance to Russian companies which are
financially sound and promise significant benefits to the social and economic
development of the Russian Federation. Palms & Company will not support
projects which contribute to violaiton of internationally recognized worker's
rights.

Eligibility requirements for U.S. investors who are partners of Russian
companies differ for project financing and political risk insurance.

Eligible Projects

Palms & Company investment banking assistance is available for new
investments, privatizations and for expansion and modernization of existing
factories in which U.S. investors are co-investors. Acqusition of existing
operations are eligible if the investor contributes additional capital
for modernization and/or expansion.

there is no requirement that the business located in Russia be wholly
owned or controlled by European, Asian or American investors. However,
only the portion of the investment made by the European, Asian or American
investor is insurable. Neither financing or insurance will normally be
available for investments in Rusisan businesses where the majority ownership
is by the Russian government. Financing is not available for projects that
can secure adequate financing from other commercial sources.

Investments arranged by Palms & Company may by in many varinats
including:

Palms & Company investment banking services are available in the
countries listed below. The host government may be required to approve
assistance for a project. The approval procedures vary from country to
country.

Armenia

Belarus

Cyprus

Dominican Republic

Estonia

Georgia

Israel

Kazakhstan

Kyrgyzstan

Latvia

Lithuania

Malta

Moldova

Netherlands Antilles

Russia

Tajikistan

Ukraine

Uzbekistan

Benefits to the United States

Net project exports from the United States are taken into consideration
in determining Palms & Company interest and assistance. Assistance
is denied to projects which involve the substitution of existing U.S. manufacturing
facilities with a Russian plant to produce for the same existing U.S. or
export markets of the U.S. Palms & Company encourages the use of U.S.
manufactured machinery, equipment and products, particularly those purchased
from U.S. small businesses, wherever possible, in considering assistance.

Benefits to The Russian Federation

Palms & Company has a policy to provide investment banking services
to Russian companies that are responsive to the development needs of Russia
and that foster private initiative and competition. The contribution of
the Russian company to the economic and social development of Russia will
be considered and will includ esuch factors as:

Increased availability of goods and services of better quality and
lower cost

The marketability and competitiveness of such products on the world
market and the contribution through exports to a balance of payments.

Foreign exchange earnings or savings

Russian taxes

Development of other local businesses.

Grandfather clauses or their equivalent in 'concurrence" agreement
from instrumentalities of Russian government having "competence".

Clients must also provide Russian government agreements. if a busness
is given monopoly rights or other competitive advantage for more than five
years, special justification is required.

Palms & Company, as a matter of policy, conducts an environmental
evaluation of every businesses which it assists with arranging financing
or insurance or guarantees, that would significantly effect the environment
of the Russian Federation. For most industries, Palms & Company expects
the company to meet World Bank ebvironmental, health and safety standards.
Of particular concern are adverse effects on forests, national parks, protected
areas and endangered species and the public. Russian companies are encouraged
to provide Palms & Company with environmental evaluations of companies.

Worker's Rights

Palms & Company, as a matter of policy, does not wish to provide
investment banking services to Russian companies that contribute to violations
of internationally recognized workers rights. Contract with Palms &
Company require agreement by the Russian company to respect these rights
including the right of association, collective bargaining and acceptable
working conditions.

COMPANY FINANCING

Palms & Company provides investment banking services in syndicating
capital and in securing loan guarantees to Russian companies where there
is participation of capital and/or management by European, Asian or American
businesses.

Rather than relying upon Russian government or Rusisan bank guarantees,
Palms & Company prefers that repayment by assured from the turnover
generated by exports. Therefore Palms & Company carefully analyzes
the economic, marketing, technical and management soundness of each business.
There must be an adequate turn-over to pay all operating costs, to service
all debt, and to provide the owners with an adequate return on investment.

The Management of the Russian companies must have a demonstrated competence
and have a proven record of success in the same or closely related business,
as well as significant continuing financial risk in the enterprise.

Ownership

Palms & Company provides services to Rusisan companies wholly owned
by European, Asian or American, as well as joint ventures in which their
are a participant with Russian companies. The investor is expected to assume
a meaningful share of the risk, generally through the purchase of at least
25% of the equity in the company.

As a rule at least 51% of the voting shares of the Russian venture should
be owned by firms or persons from the private sector. However, it is possible
that financing may be arranged for a business in which the Russian government
ownership represents a majority, if it is agreed that management will remain
in private. Insurance and guarantees are not available to companies wholly
owned by the Rusisan government.

Financing Plan

Investors must be willing to establish sound debt-to-equity relationships
that will not jeopardize the success of the business through insufficient
equity or excessive leverage. The capitalization will vary with the nature
of the specific business and will be affected by the expected cash flows.
Experience indicates that ample capitalis essential for success.

The nature of Palms & Company's services will vary, taking into
consideration the documentation requirements and the extent to which the
company requires advice and assistance. Palms & Company may assist
in designing the financial plan and in coordinating it with lenders and
investors.

Completion Agreement

In recognition of posisble cost overruns and early operating problems,
and despite careful planning and alloancefor contingencies in the financial
plan, Palms & Company, like other investment bankers, normally requires
tha the principal sponsors enter into an agreement under which they are
obligated to guarantee payment of cost over-runs prior to completion of
capital syndication. The definition of capital syndication includes certain
financial and operating tests as well as physical completion. The sponsors
must have the financial capability toperform their obligations under this
agreement.

Financing Techniques

For equity or debt financing under taken by Russian companies ranging
from $2 -$10 million loan guarantees and investment insurance are not generally
provided to American, European or Asian co-investors.

Loan guarantees are generally used for larger projects, generally ranging
in size from $10 million to $100 million, but in some cases can be as high
as $200 million.

in both cases the proposed borrower/co-investor approaches Palms &
Company to analyze and structure financing. Palms & Company determines
the appropriate terms of borrowing/financing and, where a guarantee is
sought, may assist in soliciting such gaurantee and in identifying co-investors
or lenders willing to provide the money.

Guarantees are issued to U.S. financial institutions more than 50 percent
beneficially owned by U.S. Citizens, corporations, or partnerships, or
to corporations that are at least 95% U.S. owned, but are registered in
another country. In the case of guarantees of other governments, guarantees
are issued in accordance with their policies. Typically insurance companies,
pension funds, commercial banks, and venture capital funds, provide the
money which is then guaranteed by the guaranteeng institution. These "investors"
are fully protected by the full faith and credit of the United States of
America. Such guaranteed loans are classified as eligible U.S. government
securities for insurance companies and many other institutional investors.
As a result funding is available through fixed or floating rate interest
rate obligations at approximately the same rates as those obtained by U.S.
Government agencies. In effect the Russian business is treated as having
the same credit rating as the U.S. government.

Loan Terms

The repayment schedule will reflect the projected level of cash flows
to be generated, which must be sifficient to pay principal and interest
plus provide for an adequate profit to equity investors. The temr of such
loans will typically provide for a final maturity of fice to fifteen years
following a suitable grace period during which only interest is required.

Interest rates will vary with the level of financial and political risks
involved. They will also reflect interest rates in long term capital markets.

Interest rates on guaranteed loans are comparable to those of other
government guaranteed issues of similar maturity. In addition the guaranteeing
agency charges the borrower a guarantyfee which typically averages two
and one half to five percent perannum on the outstanding principal amount.,
depending upon commercial and political risk. In some cases the guarantee
agency will lower the guarantee fee in exchange for a participation in
the income.

In general, guarantee agencies expect that its position as creditor
will be on a senior basis, pari passu with the holders of other senior
debt and that they will share in a first lien on fixed assets and other
appropriate collateral. A guarantee from the government of the Russian
Federation is not normally required. Consisten with commercial lending
practices, up-front commitment fees and cancellation fees are charged by
the U.S.,Government guarantee agency and those of other countries, and
payment is required for out-of-pocket expenses, including fees for outside
counsel and for the services of experts and consultants required by Palms
& Company to complete the business and financing plan.

The proceeds of guarantee agency financing may be spent for capital
goods and services in the country of the guaranteeing agency or in less
developed countries.

Relationship With Other Financial Institutions

Palms & Company investment banking services are designed to assist
Russian companies in accessing the lending and investing facilities of
commercial banks; local ,regional and international development banks and
investment funds,; other agencies of the U.S. and other governments such
as the Export-Import bank of the United States and a numbe rof other multilateral
institutions including the World Bank, The International Finance Corporation,
The European bank for Reconstruction and development and the Asian Development
Bank. Palms & Company advises and assists Russian companies in securing
strong western operating companies as technology and capital and management
partners and in obtaining debt and equity financing from these institutions
where appropriate and in conjunction with Palms & Company financing.

Many of Palms & Company's capital syndications involve at least
one other investor or lender, and in large syndications of capital several
such institutions and companies are typically involved. Palms & Company's
willingness to finance a substantial portion of the syndication, to accept
longer or more flexible maturities, and to finance at fixed interest rates
or through income sharing arrangements in lieu of interest, or to subordinate
equity to third party debt financing may attract participation by other
lenders and investors to a Russian company.

Procedure for Engaging Palms & Company

Russian companies interested in obtaining technology or capital or both
should submit by e-mail, as a text (.txt) file, to palms@PeterPalms.com
a business plan and private placement memorandum for the proposed capital
syndication.

a summary of the proposed use of proceeds of the capital syndication
and sources of procurement of capital goods and services;

a proposed financing plan, including the amount of new capital to be
syndicated;

pro-forma financial statements of the proposed project and accompanying
assumptions;

a brief statement of the capital contributions of the participants,
co-investors and owners;and

a brief statement of the contributions the business is expected to
make to local economic and social development.

The information prepared and submitted are carefully reviewed by Palms
& Company. In some instances Palms & Company retains independent
consultants and industry specialists to assist in its analysis and review.

Following Palms & Company's preliminary review the principals may
be asked to provide additional economic, financial and technical information.
Such information is essentially that which any board of directors would
need before committing its company to an investment.

The time required to review the information and determine whether Palms
& Company wishes to provide the services requested depends upon the
scope and detail of the data presented as well as the complexity of the
transaction. A key determinant if the thoroughness and timeliness with
which all the information required by Palms & Company is developed
and submitted.

Once an engagement is agreed to the performance of the work can vary
from three to six month or more.

The ability of Russian companies to obtain capital from private investment
funds frequently hinges on their ability to obtain investment insurance.
To understand why, Russian companies must undersand that frequently the
funds have obtained their capital from the government.

The U.S. companies which want to become co-investors in your Russian
company often cannot allocate or raise sufficient equity capital to do
so. Such a circumstance may lead a U.S. company to place excessive reliance
upon debt financing to invest in your Russian company. Generally this is
inadvisable in an economically vlitile country like the Russian Federation,
where business infrastructure is unreliable. Therefore U.S. government
agencies have provided money to a number of privately owned and managed
venture capital companies and investment funds in the U.S. that as a result
have the capability to peovide equity capital to facilitate business formation
and expansion in Russia. Such U.S. government agency supported Funds currently
operate in Russia and other New Independent States.

How The Funds Came Into Existence

U.S. government supported investment funds typically invest in 5 to
forty percent of the equity capital in each of their portfolio companies,
and own interests in ten to twenty companies when fully invested. Some
funds invest primarily in smaller companies, while others invest primarily
in larger projects.

The Fund manager typically is a voting member of each portfolio company's
board of directors or other governing body. The manager is also active
in guiding the portfolio company, particularly in strategic planning and
maintaining effective access to capital markets needed for business growth.

The investment funds are privately owned and privately managed and make
their own commercially based investment decisions. But since their investment
capital came from the U.S. government they are likely to consider invitations
to review potential investments recommended or referred by the government
to see if they meet their guidelines. Palms & Company assists Russian
companies seeking long term growth capital for their companies, by contacting
such funds where U.S. government guarantee agencies have expressed receptivity
to providing guarantees on debt portions of the financing required. A list
of such Funds in Russian language is provided
by Palms & Company.

INVESTMENT INSURANCE

Agencies of various governments provide political risk insurance to
investors in their country, contractors, exporters and financial institutions
in volved in transactions and investments in Russian companies. Speciffically
insuranc eis available to:

citizens of the United States, Western Europe or Asia investing in
Russian companies

corporations, partnerships or other associations created under the
laws of different countries and beneficially owned by their citizens.

corporations of other countries at least 95% owend byinvestors who
are citizens of countries whose governments provide such guarantees

other businesses of other countries that are owned 100% by citizens
of the nations whose governments provide such guarantees.

Insurance is available for investment in new ventures or expansions
of existing enterprises in Russia and can cover equity investments, parent
company and third party loans and loan guaranties, technical assistance
agreements, cross-border leases, assigned inventory or equipment, and other
forms of investment. Coverage is also available for contractors and risks
incurred by exporters including unresolved contractual disputes, wrongful
calling of bid, performance, advance payment and other guaranties posted
in favor of Rusisan buyers and other risks.

Such insurance can cover the following political risks:

currency inconvertibility - deterioration of the investor's
ability to convert profits, debt service and other remittances rom local
currency into U.S. Dollars.

expropriation - loss of an investment due to expropriation,
nationalization or confiscation by the Russian government; and

political violence - loss of assets or income due to war, revolution,
insurrection or politically motivated civil strife, terrorism and sabotage.

There are specialized insurance programs available for:

financial institutions

leasing arrangements

oil and gas companies

natural resource companies

contractors and exporters

Importance of Insurance To Russian Companies

Insurance offers important protection through the insured investor to
Russian companies, which is not available to them in Russia.

insures against the consequences of conversion restrictions that occur.

insurance for unlawful Rusisan government retention of foreign exchange
intended to be remitted as investment earnings

insurance to cover losses resulting from the unlawful breach of Russian
government obligations identified at the outset as vital to the successful
operation of the business

business income losses

damage to tangible property

compensation for income losses resulting from damage to specific sites
outside the insured facility, such as a critical railway spur, power station,
or supplier

There is a comprehensive program to encourage petroleum exploration,
development and production in Russia

International corporate finance in the Russian Federation is a profession
of great intricacy and complexity. many of the programs of capitalizaton
and guarantees have originated outside Russia in other donor nations and
the administration, and application process are in the hands of workers
outside Russia. most Russian general Directors have had little exposure
to these programs and have no experience in using the programs. Much can
be gained by them in securing advice of those with experience in such matters

Comments: Russian General Directors will benefit from the advice of
an experienced American Investment Banker in preparing investment capital
proposals and dealing with questions about disclosures. we invite your
inquiries

For discussions in Russian language in Moscow 7-095-324-5443, Alexander
Wislobokov